Question

The Emmett School District (ESD) contracts with the GoldenFarms Dairy for "all of the milk" GoldenFarms can produce during ESD's current school year. The contract specifies a price, but no exact quantity of milk to be purchased is set in the contract. This contract is a(n):

a) Output contract
b) Requirements contract
c) Exclusive dealing contract
d) Unilateral contract

Answer 1

The contract between ESD and GoldenFarms Dairy is a requirements contract where GoldenFarms agrees to supply all the milk ESD requires during the school year without specifying an exact quantity.

Step-by-step explanation:

The contract between the Emmett School District (ESD) and GoldenFarms Dairy where GoldenFarms agrees to supply "all of the milk" ESD requires during the current school year without specifying an exact quantity is an example of a requirements contract.

In a requirements contract, the buyer agrees to purchase all of its requirements for a particular good or service from the seller. The price is set in the contract, but the quantity can vary based on the buyer's needs.